IBERIA

28 June 2013 EQUITY RESEARCH

TOP STORY

Altri went up by 12% in the week, while the PSI 20 rose by 1.9%. There were no major reasons but in the week before Altri underperformed, lost 9.33%, as the PSI20 went down by 5.5%. So we will say that it was mainly a pull back from a strong fall (page 9).

OUT THIS WEEK Snapshots / Company Reports - Retail Setor, Price Target / Recommendation Changes – Semapa, Jerónimo Martins, Altri, Portucel, Mota- Engil News – Banking Sector, Telefónica, Telecom, EDP Renováveis, Retail Setor, Inditex, Jerónimo Martins, Altri,

WEEK AHEAD Monday – New car sales in Portugal and Spain (June)

PORTFOLIOS This week, Mib Aggressive Portfolio went up 1.65%, underperforming the PSI20 by 0.27pp. Excluding Portugal Telecom and Novabase, all stocks contributed for this underperformance (page 11). This week, Mib Liquidity Portfolio went up 2.07%, outperforming the PSI20 by 0.14pp. Excluding EDP Renováveis and Portugal Telecom, all stocks contributed for this outperformance (page 12).

Stock Market Last 1W YTD 2012 Daily Vol. (€mn) 1W 1M 6M 2012

PSI 20 5,557 1.9% -1.74% 2.93% PSI 20 110 105 111 66

IBEX 35 7,763 0.8% -4.96% -4.66% IBEX 35 3,941 2,830 2,436 2,578

Euro Stoxx 50 2,603 2.1% -1.26% 13.79% Euro Stoxx 50 10,906 8,387 7,753 7,867

WEEKLY Forex Rates Last 1W YTD 2012 Interest Rates Last 1W Chg YE12 EUR/USD 1.31 -0.8% -0.86% 1.97% Euribor 6m 0.34% 0.33% 0bp 0.32%

EUR/GBP 0.86 0.5% 5.04% -2.30% 10Y Bond PT 6.45% 6.43% 2bp 7.01% António Seladas, CFA EUR/BRL 2.87 -3.2% 6.32% -10.68% 10Y Bond SP 4.77% 4.91% -14bp 5.26% +351 21 003 7826

[email protected] Best & Worse Performers -1 Week (%) Best & Worse Performers - YTD (%) Altri 11.9 106.5 Portucel Mota-Engil 48.5 8.3 EDP Renováveis 8.0 BCP 28.0

Mota-Engil 6.6 Zon Multimedia 24.9 Av. José Malhoa, Lote 27 Sonae Capital 6.3 Sonae Capital 21.4

1099-010 Lisboa Telefónica 0.5 Cimpor -4.6

Tel / Fax: +351 21 003 7800 / 09 BPI -0.1 Inditex -10.1 Indra Portugal Telecom -1.4 -20.2 BES -1.8 -28.9

Galp Energia -3.6 BES -31.3

-8 -3 2 7 12 -60 -20 20 60 100

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All prices are those of the end of the trading session unless otherwise indicated. For important Disclosure and Disclaimer go to the second last page.

Millennium investment banking Weekly 28 June 2013

CHANGES

New Previous Motive Rating Target Rating Target Semapa Neutral 6.50 Buy 8.20 Valuation Update Semapa Reduce 6.50 Neutral 6.50 Price Performance Jerónimo Martins Neutral 17.20 Buy 17.2 Price Performance Altri Reduce 1.75 Neutral 1.75 Price Performance Portucel Neutral 2.50 Buy 2.50 Price Performance

Mota-Engil Reduce 2.20 Neutral 2.20 Price Performance

EARNINGS

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DIVIDENDS

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Millennium investment banking Weekly 28 June 2013

FINANCIALS Banking Sector Vanda Mesquita; EU reached a deal for dealing with failing banks Equity Analyst According to the press, the European Union reached an agreement to set the rules for dealing with failing banks. In the case of a bank failure, shareholders should be the first ones to assume losses. By order, creditors that are not protected should be the second ones to assume losses, then the senior debt creditors and, as a last resort, the savers whose deposits exceed €100,000. Deposits under €100,000 continue to be safeguarded. As previously mentioned, despite being difficult to quantify, this scenario should penalize banks, since in our opinion the remuneration for higher deposits than €100.000 is expected to rise. A solution like this one is equal for all banks regardless of the country in which they operate. At the same time, this solution also makes customers more selective in choosing the bank to make a deposit. Under this context, it is expected that the banks with greater financial strength and with more comfortable solvency ratios will give more security to savers and therefore attract more deposits higher than €100.000. In our opinion, we believe that net interest income will remain under pressure and that banks should be more capitalized to receive more funding.

TELECOMS Telefónica Buy – Medium Risk (Target YE13: €17.20 Alexandra Delgado, CFA TEF sells Irish unit Equity Analyst . Telefónica announced this week it has sold its Irish unit to Hutchison Whampoa for €780 mn. This figure can be increased up to €850 mn, since there is an additional deferred payment of €70 mn based on the completion of agreed financial objectives. . The agreed price implies an EV/EBITDA multiple between 7.3x and 7.9x, considering an inflow between €780 mn and €850 mn and an EBITDA declining 15% in 2013 (-23% YoY in 1T13) in the Irish unit. We believe the agreed terms are positive for Telefónica. . The sale of the Irish unit does not have a material impact on our valuation. The deal is however an important contribution for Telefónica’s debt reduction goal, standing for a 0.04x Net debt-on-EBITDA reduction. . Telefónica intends to end 2013 with €47 bn net financial debt, following €51.3 bn by the end of 2012. We remind that Telefónica sold in early March its UK fixed-line business to BSkyB for £180 million (€208 million) and a 40% equity stake in its Central America unit in the end of April for $500 million (€380 million).

Portugal Telecom Buy – Medium Risk (Target YE13: €5.40) Alexandra Delgado, CFA Oi denies negotiations with PT concerning a merger Equity Analyst Oi issued a statement on Tuesday denying there are merger negotiations between Portugal Telecom and Oi at this time. This is Oi’s response to a request by the market regulator to clarify news published by newspaper Folha de São Paulo in the weekend. PT and Oi have been focusing on generating synergies between their operations. Newly appointed CEO of Oi, Zeinal Bava, has said he will continue to focus on strategic projects, on innovation and on joint workstreams, in order to crystallize synergies. News concerning a possible merger between Oi and PT have emerged regularly since the two operators announced a strategic partnership with cross shareholdings back in July 2010. A merger at this point

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Millennium investment banking Weekly 28 June 2013

would be a very complex process from the standpoint of Oi’s shareholder structure, it wouldn’t result in a stronger Balance sheet, and would probably generate limited synergies beyond what can be generated under the existing industrial alliance. For these reasons, we believe the merger scenario does not make sense now, but that will be an alternative considered further along the road.

UTILITIES EDP Renováveis Buy – Low Risk (Target YE13: €5.45) EDPR announced the financial close of the sale of minority stakes in wind Vanda Mesquita, farm parks in Portugal Equity Analyst EDPR announced the financial close of the sale of minority stakes in wind farms in Portugal. We remind that EDPR reached an agreement with China Three Gorges (CTG) to sell 49% equity and 25% loans from shareholders in EDPR Portugal in December 2012. The final price of the transaction was set at EUR 368 million. This transaction is already included in our valuation.

CONGLOMERATE Semapa Reduce – High Risk (Target YE13: €6.50) António Seladas, CFA; Update Valuation – Cement, a difficult sector… Equity Analyst . We updated Semapa’s valuation changing the price target from 8.20YE13 to 6.5YE13, neutral recommendation, high risk; . The major impact is related with the downwards adjustment in the cement business, mainly due to Portugal environment. Cement consumption in Portugal went down by roughly 65% in the last 10 years, 50% since 2008 and for the last 3 quarters the YoY falls ranged between 29% and 39%. We still expect 16% fall this year and 4% in 2014. In our scenario we assumed a slow recovery by 2015/16 while any acceleration should just be seen by the end of the decade (2018/20). We assumed that operating margins will recover from the current abnormal low levels to the low twenties, clearly below the figures seen a few years ago, as margins in the overseas market are lower. Concerning the other regions Tunisia is still a problem as prices are regulated, Lebanon is performing pretty well, even that the war risk could prevent further investments and Brazil is just at the beginning, however we assumed that the new mill should be fully operational by 2016, roughly one year later than the management plans and margins should slowly evolve to high twenties; . Concerning the other businesses: Portucel we basically kept the valuation and detached the Environment business even that is too small to be relevant (we valued at €23.Mn); . Regarding the major issues in Semapa holding we believe that debt, after buying last year Secil minorities and Supremo’s 50% stake, is the major concern. We expect a very slow pace oF debt reduction, without further acquisitions. The process could be accelerated, by floating, up to 49% of Secil or selling a stake in Portucel. Having said that we do not expect this decision in the near future, as valuations are probably too low on Semapa’s board view. (For further details, please refer to our snapshot out this week)

RETAIL Retail Sector João Flores, May’s VAT revenues still showing a tough environment… Equity Analyst . Overall, we believe VAT lackluster number is neutral to Jerónimo Martins and Sonae, since companies are expected to keep increasing market share in a declining retail market.

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. The Government Department in charge of the Budget released today afternoon May budget execution. The VAT and ISP (oil tax) revenues are presented below; . VAT revenues went down 1.8% in May and minus 0.7% YtD continuing to show a tough environment. ISP revenues recovered in May plus 6.9% and are now negative YtD 3.8%, however have been quite volatile so difficult to perceive the trend; . Recall we estimate in 2013: LfL JM Portugal Estimated LfL sales -1.0% 2013 +2.9% 1Q13 (+3.7% ex-petrol); -2.6% 4Q12; -0.6% 3Q12; +2.4% 2Q12; -1.6% 1Q12 Total Sales JM Portugal Estimated sales +1.7% 2013 +5.3% 1Q13; -0.6% 4Q12; +2.5% 3Q12; +6.1% 2Q12; +2.1% 1Q12 Lfl Sonae MC (Food) Portugal Estimated LfL sales -1.3% 2013 +2.6% 1Q13 ; -3.7% 4Q12; -0.3% 3Q12; -4.6% 2Q12; +1.1% 1Q12). Total Sales Sonae MC (Food) Portugal Estimated sales -0.5% 2013 +4.1% 1Q13 ; -3.4% 4Q12; +0.8% 3Q12; -3.6% 2Q12; +1.0% 1Q12). Sonae SR (Non-Food) Portugal Estimated LfL sales -4.4% 2013 -8.8% 1Q13 ; -12.3% 4Q12; -5.4% 3Q12; -6.8% 2Q12; -12.1% 1Q12). Total Sales Sonae SR (Non-Food) Portugal Estimated sales -2.7% 2013 -6.3% 1Q13 ; -11.2% 4Q12; -2.7% 3Q12; -1.2% 2Q12; -1.3% 1Q12).

Retail Calendar: May 29th : Retail sales Spain (April) May 30th : Retail sales Portugal (April)

Retail Sales May13 - Positive surprises from food retail in Poland and non-food in Portugal . Overall, numbers are potentially neutral/positive to our retail valuations. We highlight positive numbers from food retail sales in Poland (back to positive territory) and Non-food recovery in Portugal (highest number since December 2010). . Portuguese retail sales (disclosed today) increased pace of decline in May to 3.5% YoY from -2.1% YoY in April. On a monthly basis, sales were up 1.9% YoY (0.6% YoY in April). Food Retail sales declined 2.1% YoY in May from +2.9% YoY in April. Non-food Retail sales fell 5.1% YoY in May (-7.3% YoY in April). Recall Portugal light-vehicle sales increased pace of decline to 5.7% YoY in May, following a 4.4% YoY decline in April. Recall we estimate in 2013: JM: Estimated LfL Sales Portugal -1.0%; Estimated Total Sales Portugal +1.7% Sonae MC (Food): Estimated LfL Sales -1.3%; Estimated Total Sales -0.5% 2013 Sonae SR (Non-Food): Estimated LfL sales -4.4% 2013; Estimated Total Sales -2.7% 2013 . Spanish retail sales (disclosed on June 27th) kept negative trend. Retail sales increased pace of decline in May to 4.5% (from -2.6% In April) while Non-food Retail sales fell 7.3% YoY in May (-3.2% YoY in April). Recall Spanish new car sales declined 2.6% YoY in May, returning to the negative trend (rose +11% YoY in April).

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Millennium investment banking Weekly 28 June 2013

Retail sales in Spain have now contracted for 35 months straight in annual terms as the nation continues to suffer from a deep recession and high unemployment. . Polish retail-sales (disclosed on June 25th) showed positive numbers in May. Overall, Polish Retail sales numbers (and declining unemployment) are potentially positive news to Jerónimo Martins. We highlight Food retail sales rose 2.3% Ytd in May (from 1.7% Ytd in April) while we estimate Biedronka`s LfL sales will reach 5% in 2013. Retail sales slightly rose 0.5% YoY on an annual basis in May (above 0.0% YoY consensus), higher than the 0.2% YoY decline seen in April. On a monthly basis, retail sales rose 1.6% MoM during the month (+0.9% MoM consensus), following a 2.7% MoM decline in April. There was a 4.8% YoY increase in Food retail sales (from -3.6% YoY in April; 8.9% YoY in March). Recall we estimate Biedronka`s LfL sales will reach 5% in 2013. Recall new car sales in Poland declined 5.4% YoY in May to 25.706 registrations, following a 0.3% YoY increase in April 2013. This brings the year-to-date total to 138.411 units, down 2.8% on 2013 (from -2.2% YTD end-April). We highlight sales numbers from May face a less favorable comparison basis which could suggest sales numbers will be weaker in next months. We highlight Unemployment rate declined to 13.5% in May from 14.0% in April (13.7% estimated). . Retail sales in Colombia (disclosed on June 26th) increased 5.7% YoY in April, following +0.8% YoY in March.

(For further details, please refer to our snapshot out today)

Inditex Buy – Medium Risk (Target YE13: €110.10) João Flores, Inditex reshuffles low cost brand Lefties Equity Analyst . According to the news, Inditex decided to reshuffle its low cost brand “Lefties”. . Lefities opened its first stores in 1993 as a Zara outlet store, then started to have its own collection and currently has 100 stores in Iberia (90 Spain + 10 Portugal). Inditex tries to hide this brand of the international scene (the Inditex web page and 2012 Annual Report does not include any reference about the Lefties existence) since we believe company is worried about the negative impact of a Zara outlet in terms of revenues and brand image. As a matter of fact, there are not Lefties stores out of the Iberian market, where it competes with Primark and the outlet business model is really successful.

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. Primark (held by Associated British Foods, ABF) is primarily located in shopping centers (35 stores by 2012YE in Spain, 6 stores in Portugal) while it’s expected to open a new flagship store in Gran Via (Madrid downtown). . Overall, we believe Inditex is trying to better face increasing competition from Irish low cost retailer Primark, since Primark low cost business model is benefiting from very tough environment in Portugal and Spain (declining disposable income in Iberia). It`s not expected to create a new retail format at short term while at longer term probably Inditex will create an independent retail format to the low cost segment (recall Lefties sales are accounted under Zara brand sales). . We highlight Spanish retail sales disclosed today kept negative trend. Retail sales increased pace of decline in May to 4.5% (from -2.6% In April) while Non-food Retail sales fell 7.3% YoY in May (-3.2% YoY in April). Recall Spanish new car sales declined 2.6% YoY in May, returning to the negative trend.

Jerónimo Martins Neutral – Medium Risk (Target YE13: €17.20) João Flores, Polish retail sales showed positive numbers in May Equity Analyst . Overall, Polish Retail sales numbers (and declining unemployment) are potentially positive news to Jerónimo Martins. We highlight Food retail sales rose 2.3% Ytd in May (from 1.7% Ytd in April) while we estimate Biedronka`s LfL sales will reach 5% in 2013. . Retail sales slightly rose 0.5% YoY on an annual basis in May (above 0.0% YoY consensus), higher than the 0.2% YoY decline seen in April. On a monthly basis, retail sales rose 1.6% MoM during the month (+0.9% MoM consensus), following a 2.7% MoM decline in April. . There was a 4.8% YoY increase in Food retail sales (from -3.6% YoY in April; 8.9% YoY in March). Recall we estimate Biedronka`s LfL sales will reach 5% in 2013. . Recall new car sales in Poland declined 5.4% YoY in May to 25.706 registrations, following a 0.3% YoY increase in April 2013. This brings the year-to-date total to 138.411 units, down 2.8% on 2013 (from -2.2% YTD end-April). We highlight sales numbers from May face a less favorable comparison basis which could suggest sales numbers will be weaker in next months. . We highlight Unemployment rate declined to 13.5% in May from 14.0% in April (13.7% estimated).

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INDUSTRIALS Altri Reduce – High Risk (Target YE13: €1.75 António Seladas, CFA Altri strongly outperforms Equity Analyst Altri went up by 12% in the week, while the PSI 20 rose by 1.9%. There were no major reasons but in the week before Altri underperformed, lost 9.33%, as the PSI20 went down by 5.5%. So we will say that it was mainly a pull back from a strong fall. Having said that at current prices, €1.87 we have a reduce recommendation as our price target is €1.75YE13. Despite the current environment, namely pulp prices, is good for Altri, the major players, Brazilian and Chilean, are getting bigger and could easily unbalance the market, namely if demands in China weakens, when new capacity should be in place in the next 2 or 3 quarters (roughly 5% to 7%).

OIL & GAS Galp Energia Buy – High Risk (Target YE13: €16.20) Vanda Mesquita, Agreement to sell a 5% stake in CLH Equity Analyst Galp announced that it has entered into an agreement to sell its 5% stake in Compañia Logística de Hidrocarburos, SA (CLH) to British Columbia for an amount of €111mn. This deal will generate a capital gain of €50mn. Financial close is expected to occur within the next 4 weeks. This transaction is within the company’s strategy to sell non-core assets. In our valuation, we value this stake at €60mn, meaning that there is a positive impact of approximately 5 cents in our price target.

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SECTOR PERFORMANCE

Sector Performance -1 Week (%) Sector Performance - YTD (%) PSI20 1.9 PSI20 -1.7

Industrials & Other 6.4 Industrials & Other 15.2

Retail * 4.0 Retail * 10.1

Telecoms & IT 3.4 Electric Utilities 5.9

Electric Utilities 2.8 Oil & Gas -3.3

Financials 1.0 Telecoms & IT -10.9

Media 1.0 Financials -12.5

Oil & Gas -3.6 Media -28.9

-6 -2 2 6 10 -38 -28 -18 -8 2 12 22

* includes Jeronimo Martins and Sonae . This week, the PSI20 went up 1.9%. The best performing sector was Industrials & Other, plus 6.4% and the worst was Oil & Gas, minus 3.6%. . On a Ytd basis, the PSI20 went down 1.7%. The best performing sector was Industrials & Other, plus 15.2% and the worst was Media, minus 28.9%.

AGGRESSIVE PORTFOLIO . This week, Mib Aggressive Portfolio went up 1.65%, underperforming the PSI20 by 0.27pp. Excluding Portugal Telecom and Novabase, all stocks contributed for this underperformance. . We highlight that the portfolio is composed by the five stocks with the highest upside potential of our coverage universe. It is equal weighted and rebalanced on a weekly basis.

LIQUIDITY PORTFOLIO . This week, Mib Liquidity Portfolio went up 2.07%, outperforming the PSI20 by 0.14pp. Excluding EDP Renováveis and Portugal Telecom, all stocks contributed for this outperformance. . We highlight that the portfolio is composed by the five stocks with the highest upside potential of our coverage universe, excluding the less liquid stocks. It is equal weighted and rebalanced on a weekly basis.

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Mib AGGRESSIVE PORTFOLIO 834 13 8 Return since inception (30th July 2004) Portfolio weekly return Risk Market Price Upside Weekly Performance 300.0 Company Rating Price (€) Target (€) Potential Return Contribution Deviation Portugal Telecom Medium 2.99 5.40 81% 3.7% 0.74pp 0.18pp 250.0 Novabase High 2.49 4.20 69% 6.0% 1.19pp 0.81pp Telefónica Medium 9.85 17.20 75% 0.5% 0.09pp -0.29pp 200.0 BES High 0.62 1.05 71% -1.8% -0.35pp -0.74pp BPI High 0.91 1.45 60% -0.1% -0.02pp -0.41pp 150.0 Portfolio 1.65% PSI 20 1.93% 100.0 Gain/loss -0.27pp Portfolio PSI20 Explained by the portfolio -0.45pp 50.0 Explained by being underweight in the remaining PSI20 stocks 0.18pp 23/Jul 17/Jan 14/Jul 07/Jan 04/Jul 29/Dec 24/Jun

Ytd Return Next week Portfolio Changes in Portfolio Risk Market Price Upside 130.0 Company In Out Rating Price (€) Target (€) Potential 125.0 Portugal Telecom Medium 2.99 5.40 81% -- 120.0 Telefónica Medium 9.85 17.20 75% 115.0 BES High0.621.0571% Novabase High 2.49 4.20 69% 110.0 BPI High0.911.4560% 105.0 100.0 Return vs. PSI 20 Portfolio PSI20 95.0 2009 2010 2011 2012 YTD 1 Month 1 Week 31/Dec 28/Feb 28/Apr 26/Jun Portfolio 71.9% -7.30% -36.6% 22.1% 10.8% -9.4% 1.7% PSI20 33.5% -10.30% -27.6% 2.9% -1.7% -6.4% 1.9% Gain/loss 38.5pp 3.0pp -9.0pp 19.2pp 12.5pp -2.9pp -0.3pp

Source: Bloomberg; Millennium investment banking "Mib Aggressive Portfolio" is composed by the five stocks with a higher upside potential of our coverage universe. "Mib Aggressive Portfolio" is equal-weighted and its composition changes at the end of the last trading day of each week. The portfolio YTD return was recalculated on the week of March 15. Page 11 of 15

Millennium investment banking Weekly 28 June 2013

Mib LIQUIDITY PORTFOLIO 83413 8 Portfolio weekly return Return since inception (31th December 2011) Risk Price Upside Weekly Performance Company Market Price (€) 155.0 Rating Target (€) Potential Return Contribution Deviation 145.0 Portugal Telecom Medium 2.99 5.40 81% 3.7% 0.74pp 0.18pp Portfolio PSI20 135.0 Telefónica Medium 9.85 17.20 75% 0.5% 0.09pp -0.29pp BES High 0.62 1.05 71% -1.8% -0.35pp -0.74pp 125.0 BPI High 0.91 1.45 60% -0.1% -0.02pp -0.41pp 115.0 EDP Renováveis Low 3.94 5.45 38% 8.0% 1.61pp 0.92pp 105.0 Portfolio 2.07% 95.0 PSI 20 1.93% Gain/loss 0.14pp 85.0 Explained by the portfolio -0.45pp 75.0 Explained by being underweight in the remaining PSI20 stocks 0.59pp 30/Dec 17/Apr 04/Aug 21/Nov 10/Mar 27/Jun

Ytd Return Next week Portfolio Changes in Portfolio Risk Price Upside 121.0 Company Market Price (€) In Out Rating Target (€) Potential 116.0 Portugal Telecom Medium 2.99 5.40 81% Galp Energia EDP R Telefónica Medium 9.85 17.20 75% 111.0 BES High 0.62 1.05 71% BPI High 0.91 1.45 60% 106.0 Galp Energia High 11.38 16.20 42%

101.0 Return vs. PSI 20 Portfolio PSI20 96.0 2011 2012 YTD 1 Month 1 Week 31/Dec 04/Feb 11/Mar 15/Apr 20/May 24/Jun Portfolio - 22.6% 5.7% -8.5% 2.1% PSI20 -27.62% 2.9% -1.7% -6.4% 1.9% Gain/loss - 19.7pp 7.4pp -2.0pp 0.1pp

Source: Bloomberg; Millennium investment banking "Mib Liquidity Portfolio" is composed by the five stocks with a higher upside potential, excluding less liquid stocks. "Mib Liquidity Portfolio" is equal-weighted and its composition changes at the end of the last trading day of each week. The portfolio YTD return was recalculated on the week of March 15.

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Millennium investment banking Weekly 28 June 2013

Latest Target Risk Trnvr (€mn) M Cap Change (%) EPS P / E EV / Sales EV / EBITDA Div Yield P/BV 2013/06/28 Upsd Rating Pr (€) YE13 Rating 3m 6m (€ mn)o Week 1M 3M 12M YTD 2011 2012E 2013E 2011 2012E 2013E 2011 2012E 2013E 2011 2012E 2013E 2011 2012E 2012E PSI 20 5,557 - - 49,279 1.93 -6.4 -4.6 21.3 -1.7 Financials 96.6 108.5 13,148 -2.0 -16.3 -10.0 -8.1 -7.9 ------BCP (1) 0.10 - - - - 12.2 15.4 1,892 4.3 -10.31.153.628.0------BES 0.62 1.05 70.7% Buy High 16.4 18.4 2,471 -1.8 -19.4 -23.0 22.0 -31.3 -0.05 0.03 -0.02 loss 31.9 loss ------0.0% 0.0% 0.5 BPI 0.91 1.45 59.7% Buy High 1.4 2.1 1,262 -0.1 -11.9 -7.9 86.7 -3.7 -0.28 0.10 0.06 loss 9.4 16.0 ------0.0% 0.0% 1.0 Telecoms 327.3 337.4 49,202 0.7 -6.9 -6.9 0.2 -3.9 - - - 11.3 12.2 9.9 2.1 1.8 1.7 6.1 5.4 5.2 9.7% 0.7% 2.1 Telefónica 9.85 17.20 74.7% Buy Medium 304.0 316.3 44,805 0. 5 -7.1 -6.1 -0.2 -3.4 1.20 0.86 0.99 11.2 11.9 10.0 2.2 1.8 1.8 6.1 5.4 5.3 9.7% 0.1% 2.2 Portugal Telecom 2.99 5.40 80.6% Buy Medium 20.6 18.6 2,681 3. 7 -8.8 -22.6 -11.5 -20.2 0.42 0.27 0.55 10.6 14.0 5.4 1.9 1.8 1.6 5.6 5.4 4.9 14.6% 8.7% 1.5 Zon Multimedia (3) 3.71 4.30 15.9% Buy Medium 2.0 1.7 1,147 2.8 6.0 12.6 61.7 24.9 0.11 0.12 0.15 20.4 24.8 24.1 1.8 2.0 2.0 4.8 5.4 5.6 6.9% 4.0% 4.4 Sonaecom 1.56 2.20 41.3% Buy High 0. 7 0.9 570 3.2 0.1 -7.5 20.2 5.1 0.17 0.21 0.14 7.1 7.2 11.0 0.9 1.1 1.2 3.5 3.7 4.0 5.6% 7.9% 0.5 Media 0.1 0.1 227 1.7 -1.5 3.5 51.6 15.0---loss 1.2 - - 10.2 - - 2.3% - - Impresa (2) 0.64 - - - - 0.0 0.0 108 3.2 3.2 56.1 93.9 106.5 -0.21 - - loss - - 1.2 - - 14.0 - - 0.0% - - Media Capital (2) 0.90 - - - - 0.0 0.0 76 0.0 -2.2 -18.9 28.6 -10.0 0.01 - - 119.7 - - 1.1 - - 8.6 --4.2%-- Cofina (2) 0.42 - - - - 0.1 0.1 43 1.0 -10.9 -23.5 23.2 -28.9 0.05 - - 16.2 - - 1.3 - - 8.4 - - 1.3% - - Technology Indra 9.94 12.25 23.2% Buy High 6. 7 8.0 1,632 -1.4 -2.3 6.9 42.5 -0.8 1.10 1.00 0.87 8.9 10.0 11.4 0.8 0.8 0.8 6.9 7.7 8.1 6.8% 3.4% 1.5 Nov abase 2.49 4.20 68.7% Buy High 0.1 0.1 78 6.0 -10.2 -12.3 31.7 8.3 0.06 0.25 0.19 33.7 9.1 12.8 0.3 0.2 0.3 4.3 2.5 3.6 1.4% 4.3% 0.7 Utilities 220.7 198.1 38,531 1.5 -2.2 8.4 24.8 -0.4 - - - 10.4 9.3 10.3- 2.1 1.9 1.9 8.0 7.7 7.4 4.5% 4.5% 0.7 Iberdrola 4.06 5.00 23.3% Buy Low 199.9 178.2 24,865 0.7 -2.8 11.6 18.9 -3.3 0.47 0.48 0.40 10.32 8.8 10.2 1.9 1.8 1.6 7.9 7.4 6.9 6.9% 7.9% 0.6 EDP 2.48 2.85 15.2% Buy Low 14.8 15.3 9,050 1.5 -0.2 3.0 37.5 8.1 0.30 0.28 0.27 7.85 8.3 9.2 1.9 1.9 2.0 7.8 8.4 8.4 7.8% 8.1% 1.0 EDP Renov áv eis 3.94 5.45 38.2% Buy Low 5.6 4.3 3,440 8.0 -3.7 4.6 51.5 -1.3 0.10 0.14 0.15 46.6 27.6 26.4 8.0 6.2 5.6 10.8 8.5 8.0 0.0% 1.0% 0.6 REN 2.20 2.50 13.5% Buy Low 0.4 0.4 1,176 1.4 -1.7 -2.1 6.9 7.2 0.23 0.23 0.22 9.3 8.9 10.0 3.8 4.5 4.5 7.3 7.0 7.1 8.0% 8.3% 1.1 Conglomerates 2.0 2.1 2,277 4.3 -4.6 0.0 ------Sonae 0.73 1.00 36.8% Buy Medium 1.7 1.6 1,462 5.8 -4.9 4.4 81.4 6.4 0.05 0.04 0.04 8.9 17.0 17.1 0.7 0.7 0.7 5.9 5.5 6.3 7.2% 4.8% 1.0 Semapa 6.53 6.50 -0.5% Reduce High 0.2 0.5 773 1.5 -4.0 -7.3 35.7 14.8 1.05 1.07 0.53 5.1 5.3 12.2 1.1 1.3 1.5 4.9 5.6 6.8 0.6% 10.4% 0.8 Sonae Capital 0.17 0.19 10.2% Buy High 0.0 0.1 43 6.3 -5.6 -5.6 -5.6 21.4 0.01 -0.08 -0.07 22.5 loss loss 2.2 2.8 3.2 loss loss loss 0.0% 0.0% 0.1 Retail 290.5 212.2 69,304.9 6.0 -2.4 -1.7 44.6 0.8 - - - 20.7 27.2 22.5- 1.9 2.7 2.2 11.3 15.3 12.7 2.5% 1.9% 7.8 Inditex 94.84 110.10 16.1% Buy Medium 275.7 200.2 59,117 2.3 -1.0 -8.3 21.6 -10.1 3.10 3.81 4.24 4.1 27.7 22.4 2.6 3.9 3.1 11.0 15.8 12.6 2.5% 1.7% 7.8 Jerónimo Martins 16.19 17.20 6.2% Neutral Medium 14.9 12.0 10,188 3.7 -1.4 6.5 23.0 10.9 0.56 0.61 0.70 4.5 24.0 23.2 0.9 0.9 0.9 12.3 13.2 12.9 2.1% 3.5% 7.6 Industrials 1.5 1.9 4,577 5.5 -6.7 -4.5 20.2 2.4 ------4.6% - - Sonae Industria 0.50 0.77 53.8% Buy High 0.1 0.2 70 3.7 -6.0 -6.0 8.0 2.7 -0.42 -0.62 -0.22 loss loss loss 0.7 0.7 0.7 12.3 10.4 10.2 loss 61.8% 0.4 Altri 1.87 1.75 -6.5% Reduce High 0.4 0.6 384 11.9 -1.6 -2.5 83 17.8 0.60 0.12 0.25 2.0 12.9 7.4 2.0 2.2 2.0 6.2 9.4 8.8 0.0% 1.3% 2.3 Portucel 2.45 2.50 2.2% Neutral Medium 0.8 0.9 1,880 8.3 -10.3 -8.7 30.3 7.5 0.27 0.26 0.23 6.7 8.9 10.8 1.6 1.5 1.7 5.5 5.9 6.8 8.5% 9.4% 1.2 Cimpor (2) 3.30 - - - - 0.1 0.2 2,218 1.2 -5.4 -2.1 6.1 -4.6 0.31 - - 17.0 - - 2.4 - - 8.9 - - 3.8% - - Construction 0.6 0.8 535 5.9 3.5 20.5 101.5 42.1 ------Mota-Engil 2.33 2.20 -5.4% Reduce High 0.6 0.8 476 6.6 7.0 25.2 132.7 48.5 0.16 0.20 0.23 6.3 7.9 10.1 0.7 0.7 0.7 6.4 6.0 6.8 10.1% 6.6% 0.8 Oil & Gas Galp Energia 11.38 16.20 42.4% Buy High 17.6 17.6 9,433 -3.6 -10.1 -6.9 19.4 -3.3 0.30 0.43 0.42 37.6 27.1 27.4 0.8 0.7 0.7 16.5 13.6 11.9 1.8% 2.0% 1.8 (1) We do not hav e a recommendation on BCP, as Mib is a registered trademark of BCP; (2) Not Cov ered; (3) Zon Multimedia figures assume merger with Optimus Page 13 of 15

Millennium investment banking Weekly 28 June 2013

DISCLOSURES . This report has been prepared on behalf of Millennium investment banking (Mib), a registered trademark of Banco Comercial Português, S.A. (Millennium bcp). . Millennium bcp is regulated by Comissão de Mercado de Valores Mobiliários. . Recommendations: Buy means more than 10% absolute return; Neutral means between 0% and +10% absolute return; Reduce means between -10% and 0% absolute return; Sell means less than -10% absolute return. . Unless otherwise specified, the time frame for price targets included in this report is current year-end or next year-end. . Risk is defined by the analyst’s view in a qualitative way (High, Medium, Low). . Usually we update our models and price targets in between 3 and 9 months. . Millennium bcp prohibits its analysts and members of their households to own any shares of the companies covered by them. . BCP group may have business relationships with the companies mentioned in this report. . Millennium bcp, expects to receive or intends to seek compensations for investment banking services from the companies mentioned in this report. . The views expressed above, accurately reflect personal views of the authors. They have not and will not receive any compensation for providing a specific recommendation or view in this report. There were not any agreements between the companies covered and the analysts regarding the recommendation. . Analysts are paid in part based on the profitability of BCP group, which includes investment banking revenues. . BCP group has more than 2% of EDP. . BCP group was chosen to evaluate EDP regarding the 8th stage of the privatization process. . BCP group was chosen to evaluate REN regarding the 2nd stage of the privatization process. . A member of the Executive Board of Directors of Millennium bcp is member of the General and Supervisory Board of EDP - Energias de Portugal, SA. . Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was chosen as a joint global coordinator of the Initial Public Offering of EDP Renováveis. . Banco Millennium bcp Investimento, S.A. (merged into Millennium bcp) was part of the consortium, as a Co-Leader, of BES rights issue, done in April 2009. . Millennium bcp was part of the consortium, as Co-Manager, of BES rights issue completed in May 2012. . Millenniumbcp through its investment banking department is providing investment banking services to Tagus Holdings S.a.r.l. (“Offeror” in the launch of a tender offer over Brisa - Autoestradas de Portugal, S.A. shares). . Recommendations on Millennium bcp covered companies (%) Recommendation Jun-13 Mar-13 Dec-12 Jun-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Buy 77% 76% 77% 78% 68% 79% 63% 54% 41% 37% 30% 63% Neutral 9% 10% 12% 4% 11% 7% 15% 4% 27% 11% 40% 6% Reduce 14% 14% 4% 0% 0% 0% 7% 0% 0% 21% 5% 6% Sell 0% 0% 4% 7% 7% 4% 4% 0% 14% 16% 5% 0% Unrated/Under Revision 0% 0% 4% 11% 14% 11% 11% 42% 18% 16% 20% 25% Performance -4.6% 3.0% 20.4% -14% -28% -10% 33% -51% 16% 30% 13% na PSI 20 5,557 5,822 5,655 4,698 5,494 7,588 8,464 6,341 13,019 11,198 8,619 7,600

DISCLAIMER This information is not an offer to sell or a solicitation to enter into any particular deal or contract. It consists of data compiled by or of opinions or estimates from Banco Comercial Português, S.A. and no representation or warranty is made as to its accuracy or completeness. This information is merely an auxiliary means of analysis to be used by its recipients, who will be solely responsible for its use, including for any losses or damages that may, directly or indirectly, derive from it. Its reproduction is not allowed without permission from the BCP group. The data herein disclosed are merely indicative and reflect the market conditions prevailing on the date they have been collected. Thus, its accuracy and timing must absolutely be confirmed before its usage. Any alteration in the market conditions shall imply the introduction of changes in this report. This information / these opinions may be altered without prior notice and may differ or be contrary to opinions expressed by other business areas of BCP group as a result of using different assumptions and criteria. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results.

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OFFICE LOCATIONS

Millennium investment banking Av. José Malhoa, Lote 27 - 5 1099-010 Lisboa Portugal Telephone +351 21 003 7811 Fax +351 21 003 7819 / 39

Equity Team Luis Feria - Head of Equities

Equity Research +351 21 003 7820 António Seladas, CFA - Head (Industrials and Small Caps) Alexandra Delgado, CFA (Telecoms and IT) João Flores (Media and Retail) Vanda Mesquita (Banks, Utilities and Oil&Gas) Ramiro Loureiro (Market Analysis) Sónia Martins (Market Analysis) Sónia Primo (Publishing)

Prime Brokerage +351 21 003 7855 Vitor Almeida

Equity Sales/Trading +351 21 003 7850 Paulo Cruz - Head Gonçalo Lima Jorge Caldeira Nuno Sousa Paulo Santos Pedro Ferreira Cruz Pedro Gonçalves Pedro Lalanda

Equity Derivatives +351 21 003 7890 Jorge Pina - Head Ana Lagarelhos Diogo Justino Marco Barata Maria Cardoso Baptista, CFA